Neelesh Man Singh Pradhan CEO, NCHL 10th Sep 2019 Fostering Innovation in Public Sector Role of ICT Neelesh Man Singh Pradhan Chief Executive Officer, NCHL 5th Dec 2019 Impact of electronic payments on economic growth 0.1% to 0.3% increase on global GDP due to higher card usage - Moody’s Analytics based on 70 countries between 2011 – 2015 Neelesh Man Singh Pradhan CEO, NCHL 10th Sep 2019

Agenda NCHL Overview Innovation in Public Sector Innovation Types in Public Sector Public Sector Innovation Framework Emerging Trends in Public Sector Innovation Examples Takeaways Q & A

Nepal Clearing House Ltd. - An Overview Promoted by Nepal Rastra Bank (central bank of Nepal) and the banks & financial institutionsto establish and operate national payment systems. 5 national payment systems in operations. Work with the stakeholders including central bank, various departments of GoN, BFIs, others. Facilitate for policy and regulation drafting required for digital payment ecosystem NCHL Product/Service Roadmap

NCHL Overview: Product/ Services Paper based instruments including cheques, MC, Drafts (NPR, USD, EUR, GBP) Daily Txn Value: NRs 30 Billion+ Instruction based payments - Direct Credit & Direct Debit) (NPR, USD, EUR, GBP) Daily Txn Value: NRs 7 Billion Processes real-time retail txns (NPR) from alternate channels www.connectips.com, Mobile app, payment gateway, APIs, Bank Daily Txn Value: NRs 40 Cr + Consolidated APIs of NCHL-IPS, connectIPS and other system Interfaces for alternate channels (Mobile, Internet, Corporate), Other institutions/members. Integration component for BFIs to connect NRB’s RTGS system. Interface RTGS & BFI’s CBS Primary focus on payment system infrastructure development with BFIs (A, B, C) as Direct Members. Non-bank institutions (financial & others) required for overall development of payments ecosystem. Access provided as Indirect/ Technical Members (with transactions through bank accounts of BFIs). Few non-bank entities include: GoN (FCGO, IRD, PSC, OCR, Passport), EPF, CIT, SSF, NEPSE & Brokers, Merchant banks, Remittance, Insurance, PSPs/PSOs (digital wallet & other providers), etc. Public Enterprises

Innovation in Public Sector Focus of Public Sector What core service? How to deliver? Compliance Procedure

Innovation in Public Sector Why Public Sector is behind the curve on innovation? Over the last 50-60 years, it was the public sector that developed majority of the original information technology system. Eg. Telephone, Internet. Either outdated today or need major upgrades. Resistance to change One of the major constrain being the procurement & long budget cycle (desire to have fixed cost model) Why is now the time to innovate for Public Sectors? Increasing expectations from citizens: Fast paced, digital society expect to have same level expectation as from private entities. Eg. Private Vs Govt bank; Shorter technology timespan: Technology today has shorter lifespan. Eg. Land line phone Vs Mobile phones Security threats: Requirement to harden the legacy systems of public sector.

Innovation Type in Public Sector

Public Sector Innovation Framework

Emerging Trends in Public Sector Innovation Combining human and machine data: Governments are finding new ways of combining the insights of citizens with machine-generated data and analytics to improve government services. Examples: Nepal Police responding on their official facebook on the comments by general public Automated data analytics built around social media to trace and respond on immergencies (eg. Twitcident of Finland Police)

Emerging Trends in Public Sector Innovation Scaling Government: Finding new ways to scale up innovation, from small-scale pilots to larger government initiatives (labs, incubators, etc.) Example Nepal’s IdeaStudio – Public private partnership to incubate startups and supporting them in execution. Australia has launched DataStart, a public-private partnership to find, incubate and accelerate start-up ideas that leverage openly available data from the Australian Government

Emerging Trends in Public Sector Innovation Citizens as experts: Engaging citizens at every stage of the policy cycle: from shaping ideas to designing, delivering and monitoring public services. Examples HelloSarkar of Government of Nepal, Office of Prime Minister for collection complain rederessals from public directly Finland’s Place to Experiment platform connects citizen innovators with government and crowdfunded resources to find new ways to strengthen government programs.

Emerging Trends in Public Sector Innovation Personalized services: Designing user-centred services that provide holistic solutions which are more attuned to the needs of each individual citizen Example Department of Civil Registration Nepal – Providing online registration of all social events. mGene at UAE’s Al Qassimi Hospital to capture newborn baby’s facial photo to identify congenital birth defects

Emerging Trends in Public Sector Innovation Experimental government: By testing and validating new ideas at a manageable scale before diffusing and scaling-up, governments can explore new solutions while minimizing cost. Example Random sampling of digitally submitted tax information by Inland Revenue Department of Nepal

Final Takeaways Innovation is all about change: To achieve real change, engage with what might be and not just what is. Think for future 5-10 years from today Innovation to focus at the core of the Public Sector, namely Service, Process, Regulation and Policy Data and Information are critical. Data driven models of innovation. Engage citizens and prototyping is important